“Digital music has to be simple like a CD” Spotify CEO

Daniel Ek and I have a long, weird history. Both of us started our companies right next to each other at Pier 38 on the Embarcadero in San Francisco. He was renting a desk from a company next door to us and we talked often. And today when I called him to discuss the much-awaited launch of Spotify in the U.S., he reminded me of those early days.

But what has not changed is Ek’s belief that music industry was going through a fundamental change. “The music has changed from ownership to anywhere access and sharing of that music,” he says. Sharing, begets more sharing and it begets more listening of music and that powerful loop is the life force of Spotify.

One of the reasons why I personally loved Spotify is because to me it represented the kind of application that is created specifically for an always-connected, high-speed broadband enabled life. Without connectivity the app is as useful as a car without wheels – but without the app, connectivity is not as exciting as it can be. Sure for now Spotify has offline access, but Ek’s vision of music as a shared experience still depends on being connected

Here is a short interview with Ek, who was calling me from somewhere on the west coast.

Om Malik: What are your expectations from the U.S. market? I read somewhere that you want hundreds of millions of users.

Daniel Ek: I don’t think like that. I don’t have any certain expectations in numbers. From my perspective music has changed from ownership to anywhere access and sharing of that music. The U.S. is the largest music market in the world so in a way we cannot be about sharing without being in this important market.

OM: What kind of conversions to paid service will you get for Spotify in the U.S.?

DE: We have said in the past that 15 percent of our users pay for the service and the U.S. has the same potential. Our view is that when people are social with their music and recommendations, they convert into paying users and that is key to our success. There is no indication why users are any different in the U.S.

OM: What about mobiles?

DE: Android in the U.S. is very healthy and definitely very attractive to us. It is growing more and more and it is important to us. The Apple ecosystem is 200 million strong but there are 4 billion mobile devices out there and we think about that.

OM: Are you worried that Apple would be a problem for Spotify on iOS?

DE: Just because Apple has a music service, people tend to overdramatize this tension with Apple. People forget that Apple is about the best-of-breed apps on its ecosystem and they are going to encourage that.

OM: So how are you viewing Spotify and its role in the digital music ecosystem?

DE: We think the digital music has to become simple like a CD – it plays in every CD player. That is what attracts us to consumer electronic devices. I guess from our perspective, we want music to become like water – music on your Sonos, music on your Samsung or music in your cars based on Spotify.

OM: Can you elaborate on your comment about music being more like water?

DE: Lady Gaga is now known and heard by more than 2 billion people even though she has sold only a few million albums. Two billion of those have heard of her music from other locations like YouTube videos for example. What that shows that people today are consuming music in much larger degree in different places on different devices. Spotify wants to make consuming music simpler and at the same time pay the rights owners.

OM: What does Spotify look like when it grows up?

Daniel Ek (Third from left) with Shakil Khan (right), Spotify's head of special projects with others at a Spotify event

DE: The reason we had an album with 10-14 songs was because of the physical limitations of the format. It was the same with vinyl records. On digital there is no physical limitation so the very idea of what is an album can be different. Now an artist can release one song every two weeks. Or she can create an audio-visual experience around the song. I want Spotify to become a platform around music so artists can innovate around Spotify. And at the same time music listeners can vote with their hands and attention and become involved in the creation of the music experience itself.

My interpretation of Ek’s comments is that the company wants to essentially become the “CD” and the next evolution of the iPod. In order to do that, Spotify will be working with artists and provide them a social and a global platform. What comes next for the company — convincing artists to team up with Spotify.